Questions/Answers

In Curitiba, in the end of 2016, the city and the country was facing a severe fiscal and financial crisis. Many expenses were being fulfilled without commitment, or “off budget” with no budgetary correspondence, in a way that the budgetary resources for the public administration defrayal were gradually being destined to personal and social security expenses, that grew in exponential rate. The Municipality was collecting large sums in debts with suppliers, the social security system and the public servers. Most of the suppliers were not being paid for their services. Many services were reduced or interrupted. The most vulnerable social layers, consequently more dependent of public services were suffering with the municipal crisis. The economic recession and the decadency of the municipal revenues, the mechanism of “debt rollover” could no longer operate, the city had announced its collapse for 2017. Curitiba’s Financial Recovery Plan was implemented with the designation of the Secretariat’s new team to elaborate studies and technical analysis of the design of a meaningful fiscal adjustment in the city of Curitiba, beginning in 2017, which allowed the rebalance of public accounts and guaranteed the sustainability of public spending, with brand new mechanisms, in a transparent and efficient way.

Iniatilly, the main measure was the diagnosis of the municipal fiscal situation, expansion of transparency and the establishment of a new fiscal target, demonstrating to society and the control bodies the true reality of the municipal public accounts. The Municipality had to draw up a short-term, medium-term and long-term recovery plan to solve the imminent disruption of services in a short period of time, but also to establish a path of sustainability for public accounts. The measures implemented, both from the point of view of expenditure and revenue, sought efficiency, qualification of public expenditure and the tax system.

The combined measures of the Curitiba's Financial Recovery Plan (CRP) brought a unique perspective that differentiate it from a regular fiscal adjustment. In particular, the measures included the need for a short-term reorganization of finances. Its important emphasize the work of the city of Curitiba in promoting fiscal balance as a prime factor for the implementation of public policies at the local level. In search of solutions for the 17 Objectives of Sustainable Development, the Curitba’s Financial Recovery Plan, developed by the Secretariat of Finance and Planning of the Municipality of Curitiba, has especial attention to social issues.

The initiative had a positive impact on the whole of local society, because it valued the balance of public accounts. Curitiba would collapse in 2017, with the cessation of most of the municipal public services and from the implementation of the measures investments increased as well as social spending. The initiative had a positive impact on the whole of local society, because it valued the balance of public accounts. Curitiba would collapse in 2017, with the cessation of most of the municipal public services and from the implementation of the measures investments increased as well as social spending. Curitiba moved from its last position in liquidity to the highest level, broadened its governance and transparency, tracing a new sustainability route for public accounts.

The initiative is an innovative one, as it brought innovative mechanisms in a new Municipal Fiscal Responsibility Law and also in mechanisms of governance and social security. Several municipalities and Brazilian states are taking their inspiration from the measures implemented.

The innovation is unique, as Curitiba is the first city to promote such a broad, non-restrictive Financial Recovery Plan. In the proposed mechanisms are many new measures, which promoted the city's fiscal recovery by increasing investments and social spending.

Other municipalities such as Porto Alegre, the State of Paraná, Balneário Camboriú, Brusque, among other cities are seeking to adapt to their local realities the measures implemented in Curitiba, especially in personnel expenses and social security. These mandatory expenditures have grown exponentially in recent years.

The resources used to implement the initiative were human - in the drafting of laws - with the team of technicians in public budget of the City of Curitiba and technological in the programs of modernization of the tax collection and expansion of transparency and governance.

The initiative is sustainable because it strengthens the institution and retakes the credibility of society in the execution of public policies in an effective and transparent way. The sustainability of public accounts is a key factor in ensuring that no one is left behind and that social spending and investments are used to promote economic and social development.

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The initiative was evaluated by a valuation report after completing 2 years of existence, as well as the indicators of liquidity of the Municipality are analyzed by the National Treasury Secretariat and the Court of Audit of the State of Paraná. The figures presented by the two bodies demonstrate the great evolution of fiscal health in Curitiba.

Fiscal health indicators were used, such as the primary surplus, short-term liabilities, liquidity indicators, social security expenditures and personnel expenses. Through the analysis of these indicators it is possible to verify how the implemented measures modified the situation of collapse that the Municipality was.

The result of the evaluation showed that Curitiba left the last position in liquidity and now has the highest mark, reduced personnel expenses and social security expenses and now has primary surpluses.

Stakeholders such as public agents, class associations, businessmen, city councilors and municipal officials, as well as the public, participated in public hearings, numbering more than 10 and presented suggestions, which were used to improve the plan.

The lessons learned demonstrate the importance of creating innovative and effective measures to change the fiscal health of a city, which has extremely rigid budgets. To this end, short-term measures were instrumental in sustaining the system and promoting change. From the effects, there was great support from the population with the implemented measures.